[Federal Register Volume 67, Number 72 (Monday, April 15, 2002)]
[Notices]
[Pages 18165-18172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9215]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-351-832]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Carbon and Certain Alloy 
Steel Wire Rod from Brazil

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: April 15, 2002.

[[Page 18166]]


FOR FURTHER INFORMATION CONTACT: Vicki Schepker or Christopher Smith, 
at (202) 482-1756 or (202) 482-1442, respectively; AD/CVD Enforcement 
Group II Office 5, Import Administration, Room 1870, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

The Applicable Statute and Regulation

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce (the Department) 
regulations refer to the regulations codified at 19 CFR part 351 
(2001).

Preliminary Determination

    We preliminarily determine that carbon and certain alloy steel wire 
rod (steel wire rod) from Brazil is being sold, or is likely to be 
sold, in the United States at less than fair value (LTFV), as provided 
in section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the Suspension of Liquidation section of this notice.

Case History

    This investigation was initiated on September 24, 2001.\1\ See 
Initiation of Antidumping Duty Investigations: Carbon and Certain Alloy 
Steel Wire Rod from Brazil, Canada, Egypt, Germany, Indonesia, Mexico, 
Moldova, South Africa, Trinidad and Tobago, Ukraine, and Venezuela, 66 
FR 50164 (October 2, 2001) (Initiation Notice). Since the initiation of 
the investigation, the following events have occurred:
---------------------------------------------------------------------------

    \1\ The petitioners in this investigation are Co-Steel Raritan, 
Inc., GS Industries, Inc., Keystone Consolidated Industries, Inc., 
and North Star Steel Texas, Inc.
---------------------------------------------------------------------------

    On October 12, 2001, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that the domestic industry producing steel wire rod is 
materially injured by reason of imports from Brazil, Canada, Germany, 
Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine of carbon 
and certain alloy steel wire rod.\2\ See Determinations and Views of 
the Commission, USITC Publication No. 3456, October 2001.
---------------------------------------------------------------------------

    \2\ With respect to imports from Egypt, South Africa, and 
Venezuela, the ITC determined that imports from these countries 
during the period of investigation (POI) were negligible and, 
therefore, these investigations were terminated.
---------------------------------------------------------------------------

    The Department issued a letter on October 16, 2001, to interested 
parties in all of the concurrent steel wire rod antidumping 
investigations, providing an opportunity to comment on the Department's 
proposed model match characteristics and hierarchy. The petitioners 
submitted comments on October 24, 2001. The Department also received 
comments on model matching from respondents Hysla S.A. de C.V. 
(Mexico), Ivaco, Inc., Ispat Sidbec Inc. (Canada). These comments were 
taken into consideration by the Department in developing the model 
matching characteristics and hierarchy for all of the steel wire rod 
antidumping investigations.
    On November 9, 2001, the Department issued an antidumping 
questionnaire to Companhia Siderurgica Belgo Mineira and its fully-
owned subsidiary, Belgo-Mineira Participacao Industria e Comercio S.A. 
(BMP), collectively Belgo Mineira.\3\ We issued supplemental 
questionnaires on December 27, 2001, January 18, and February 13, 2002. 
On December 5, 2001, the petitioners alleged that there that there was 
a reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of steel wire rod from Brazil, Germany, 
Mexico, Moldova, Turkey, and Ukraine.\4\
---------------------------------------------------------------------------

    \3\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales or, if the home 
market is not viable, of sales in the most appropriate third-country 
market. Section C requests a complete listing of U.S. sales. Section 
D requests information on the cost of production (COP) of the 
foreign like product and the constructed value (CV) of the 
merchandise under investigation. Section E requests information on 
further manufacturing.
    \4\ On December 21, 2001 the petitioners further alleged that 
there was a reasonable basis to believe or suspect that critical 
circumstances exist with respect to imports of steel wire rod from 
Trinidad and Tobago. On February 4, 2002, the Department 
preliminarily determined that critical circumstances exist with 
respect to wire rod from Germany, Mexico, Moldova, Trinidad and 
Tobago, and Ukraine; however, the Department did not make a 
determination with respect to wire rod from Brazil at that time. See 
Memorandum to Faryar Shirzad Re: Antidumping Duty Investigation of 
Carbon and Certain Alloy Steel Wire Rod from Mexico and Trinidad and 
Tobago--Preliminary Affirmative Determinations of Critical 
Circumstances (February 4, 2002); See also Carbon and Certain Alloy 
Steel Wire Rod from Germany, Mexico, Moldova, Trinidad and Tobago, 
and Ukraine; Notice of Preliminary Determination of Critical 
Circumstances, 67 FR 6224 (February 11, 2002).
---------------------------------------------------------------------------

    On January 17, 2002, the petitioners requested a 30-day 
postponement of the preliminary determinations in this investigation. 
On January 28, 2002, the Department published a Federal Register notice 
postponing the deadline for the preliminary determinations until March 
13, 2002. See Notice of Postponement of Preliminary Antidumping Duty 
Determinations: Carbon and Certain Alloy Steel Wire Rod from Brazil, 
Canada, Indonesia, Germany, Mexico, Moldova, Trinidad and Tobago, and 
Ukraine, 67 FR 3877 (January 28, 2002). On March 4, 2002, the 
petitioners requested an additional 20-day postponement of the 
preliminary determinations in this investigation. On March 15, 2002, 
the Department published a Federal Register notice postponing the 
deadline for the preliminary determinations until April 2, 2002. See 
Notice of Postponement of Preliminary Antidumping Duty Determinations: 
Carbon and Certain Alloy Steel Wire Rod From Brazil, Canada, Germany, 
Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 FR 
11674 (March 15, 2002).

Postponement of Final Determination and Extension of Provisional 
Measures

    Section 735(a)(2)(A) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise. Section 351.210(e)(2) of the 
Department's regulations requires that exporters requesting 
postponement of the final determination must also request an extension 
of the provisional measures referred to in section 733(d) of the Act 
from a four-month period until not more than six months. We received a 
request to postpone the final determination from Belgo Mineira on April 
1, 2002. In its request, the respondent consented to the extension of 
provisional measures to no longer than six months. Since this 
preliminary determination is affirmative, the request for postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, and there is no compelling reason 
to deny the respondent's request, we have extended the deadline for 
issuance of the final determination until the 135th day after the date 
of publication of this preliminary determination in the Federal 
Register. Furthermore, any provisional measures imposed by this 
investigation have been extended from a four month period to not more 
than six months.

[[Page 18167]]

Period of Investigation

    The POI is July 1, 2000, through June 30, 2001. This period 
corresponds to the four most recently completed fiscal quarters prior 
to the month of the filing of the petition (i.e., August 2001).

Scope of Investigations

    The merchandise covered by these investigations is certain hot-
rolled products of carbon steel and alloy steel, in coils, of 
approximately round cross section, 5.00 mm or more, but less than 19.00 
mm, in solid cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or more of lead, 0.05 percent or more 
of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of 
phosphorus, more than 0.05 percent of selenium, or more than 0.01 
percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) Grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no inclusions greater than 20 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) Grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no inclusions greater than 20 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications, end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under investigation are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is dispositive.
    See Carbon and Certain Alloy Steel Wire Rod: Requests for exclusion 
of various tire cord quality wire rod and tire bead quality wire rod 
products from the scope of Antidumping Duty (Brazil, Canada, Egypt, 
Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, 
Ukraine, and Venezuela) and Countervailing Duty (Brazil, Canada, 
Germany, Trinidad and Tobago, and Turkey) Investigations.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. Where it is not practicable to examine all known 
producers/exporters of subject merchandise, section 777A(c)(2) of the 
Act permits us to investigate either 1) a sample of exporters, 
producers, or types of products that is statistically valid based on 
the information available at the time of selection, or 2) exporters and 
producers accounting for the largest volume of the subject merchandise 
that can reasonably be examined. In the petition, the petitioners 
identified four producers/exporters of steel wire rod. The data on the 
record indicate that two of these producers/exporters sold subject 
merchandise to the United States during the period of investigation 
(i.e., the period July 2000 through June 2001); however, due to limited 
resources we determined that we could investigate only the largest 
exporter, Belgo Mineira. See Respondent Selection Memorandum, from 
David Bede and Vicki Schepker, dated November 9, 2001.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by the respondents covered by the description in the Scope of 
Investigation section, above, and sold in Brazil during the POI are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied on eight 
criteria to match U.S. sales of subject merchandise to comparison-
market sales of the foreign like product or constructed value (CV): 
grade range, carbon content range, surface quality, deoxidization, 
maximum total residual content, heat treatment, diameter range, and 
coating. These characteristics have been weighted by the Department 
where appropriate. Where there were no sales of identical merchandise 
in the home market made in the ordinary course of trade to compare to 
U.S. sales, we compared U.S. sales to the next most

[[Page 18168]]

similar foreign like product on the basis of the characteristics listed 
above.

Fair Value Comparisons

    To determine whether sales of steel wire rod from Brazil were made 
in the United States at less than fair value, we compared the export 
price (EP) and the constructed export price (CEP) to the normal value 
(NV), as described in the Export Price and Constructed Export Price and 
Normal Value sections of this notice. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs and 
CEPs. We compared these to weighted-average home market prices or CVs, 
as appropriate.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP as defined in sections 772(a) and 772(b) of the Act, respectively. 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold before the date of importation by the 
producer or exporter outside of the United States to an unaffiliated 
purchaser in the United States or to an unaffiliated purchaser for 
exportation to the United States, as adjusted under subsection 722(c) 
of the Act.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold in the United States before or after 
the date of importation by or for the account of the producer or 
exporter of such merchandise or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter, as adjusted under subsections 772(c) and (d) of the Act.
    We calculated EP and CEP, as appropriate, based on the packed 
prices charged to the first unaffiliated customer in the United States. 
In accordance with section 772(c)(2)(A) of the Act, we made deductions 
from the starting price for movement expenses. These include freight 
charges incurred in transporting merchandise from the plant to a 
warehouse, warehousing expenses, brokerage and handling expenses, ocean 
freight and associated expenses (including marine insurance) for 
shipments by ocean vessel, as well as, U.S. port, discharge, cleaning 
and rebanding, inland freight (where applicable), U.S. duty, and other 
U.S. transportation expenses. We added an amount for duty drawback 
received on imports of coke used in the production of subject 
merchandise. We also deducted any rebates from the starting price and 
added interest revenue.
    Section 772(d)(1) of the Act provides for additional adjustments to 
calculate CEP. Accordingly, where appropriate, we deducted direct and 
indirect selling expenses incurred in selling the subject merchandise 
in the United States, including direct selling expenses (credit), 
indirect selling expenses, and inventory carrying costs. Pursuant to 
section 772(d)(3) of the Act, where applicable, we made an adjustment 
for CEP profit.
    Where appropriate, in accordance with section 772(d)(2) of the Act, 
the Department also deducts from CEP the cost of any further 
manufacture or assembly in the United States, except where the special 
rule provided in section 772(e) is applied. In this case, Belgo Mineira 
requested that it be exempted from reporting the costs of further 
manufacture or assembly in the United States because of the complexity 
of reporting such data in this case. Section 772(e) of the Act provides 
that, where the subject merchandise is imported by an affiliated person 
and the value added in the United States by the affiliated person is 
likely to exceed substantially the value of the subject merchandise, 
the Department has the discretion to determine the CEP using 
alternative methods.
    The alternative methods for establishing export price are: (1) The 
price of identical subject merchandise sold by the exporter or producer 
to an unaffiliated person; or (2) the price of other subject 
merchandise sold by the exporter or producer to an unaffiliated person. 
The Statement of Administrative Action (SAA) notes the following with 
respect to these alternatives:
    ``There is no hierarchy between these alternative methods of 
establishing the export price. If there is not a sufficient quantity of 
sales under either of these alternatives to provide a reasonable basis 
for comparison, or if Commerce determines that neither of these 
alternatives is appropriate, it may use any other reasonable method to 
determine constructed export price, provided that it supplies the 
interested parties with a description of the method chosen and an 
explanation of the basis for its selection. Such a method may be based 
upon the price paid to the exporter or producer by the affiliated 
person for the subject merchandise, if Commerce determines that such 
price is appropriate.'' See SAA accompanying the URAA, H.R. Doc. No. 
103-316 (1994) at 826.
    To determine whether the value added is likely to exceed 
substantially the value of the subject merchandise, we estimated the 
value added based on the difference between the averages of the prices 
charged to the first unaffiliated purchaser for one form of the 
merchandise sold in the United States and the averages of the prices 
paid for the subject merchandise by the affiliated person. See 19 CFR 
351.402 (2). Based on this analysis, and the information on the record, 
we determined that the estimated value added in the United States by 
TrefilArbed Arkansas (TrefilArbed), Belgo Mineira's affiliated further 
manufacturer in the United States, accounted for at least 65 percent of 
the price charged to the first unaffiliated customer for the 
merchandise as sold in the United States.\5\ Therefore, we determined 
that the value added is likely to exceed substantially the value of the 
subject merchandise. In this case, all of the products Belgo Mineira 
sold to its further manufacturer, as defined by the Department's model 
match criteria, were also sold to unaffiliated CEP customers during the 
POI. As a consequence, the Department relied on the first methodology, 
the price of identical merchandise, and calculated Belgo Mineira's 
margin for these sales by applying the margin for CEP sales of relevant 
products to the POI quantity of the identical further manufactured 
product. For further discussion, See Preliminary Determination 
Calculation Memorandum from Vicki Schepker and Christopher Smith to 
Constance Handley, April 2, 2002.
---------------------------------------------------------------------------

    \5\ See Memorandum from Vicki Schepker and Chris Smith to Gary 
Taverman dated February 8, 2002.
---------------------------------------------------------------------------

Normal Value

A. Selection of Comparison Markets

    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate), that the time of the sales reasonably 
corresponds to the time of the sale used to determine EP or CEP, and 
that there is no particular market situation that prevents a proper 
comparison with the EP or CEP. The statute contemplates that quantities 
(or value) will normally be considered insufficient if they are less 
than five percent of the aggregate quantity (or value) of sales of the 
subject merchandise to the United States. See section 
773(a)(1)(C)(ii)(II). We found that Belgo Mineira had a viable home 
market for steel wire rod. The respondent submitted home market sales 
data for purposes of the calculation of NV.

[[Page 18169]]

    In deriving NV, we made adjustments as detailed in the Calculation 
of Normal Value Based on Home Market Prices section below.

B. Cost of Production Analysis

    Based on allegations contained in the petition, and in accordance 
with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to 
believe or suspect that steel wire rod sales were made in Brazil at 
prices below the cost of production (COP). See Initiation Notice, 66 FR 
at 50166. As a result, the Department has conducted an investigation to 
determine whether the respondent made home market sales at prices below 
its COP during the POI within the meaning of section 773(b) of the Act. 
We conducted the COP analysis described below.
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of Companhia Siderurgica Belgo 
Mineira's and BMP's\6\ cost of materials and fabrication for the 
foreign like product, plus amounts for the home market general and 
administrative (G&A) expenses, including interest expenses, selling 
expenses, and packing expenses. We relied on the COP data submitted by 
Companhia Siderurgica Belgo Mineira and BMP, except for Companhia 
Siderurgica Belgo Mineira's reported cost of materials purchased from 
affiliated parties, which we adjusted to reflect the highest of market 
price, transfer price, or cost of production. In addition, for both 
Companhia Siderurgica Belgo Mineira and BMP, we increased the G&A 
expenses to include non-operating expenses for profit sharing and 
excluded the non-operational income related to the sale of a 
subsidiary. We then calculated one weighted-average cost for each 
CONNUM based on the respective production quantities for the companies.
---------------------------------------------------------------------------

    \6\ BMP leases and operates the Juiz de Fora mill.
---------------------------------------------------------------------------

2. Test of Home Market Sales Prices
    We compared the adjusted weighted-average COP to the home market 
sales of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP within an extended period of time (i.e., a period 
of one year) in substantial quantities and whether such prices were 
sufficient to permit the recovery of all costs within a reasonable 
period of time.
    On a model-specific basis, we compared the revised COP to the home 
market prices, less any taxes that are not collected when the product 
is sold for export, billing adjustments, applicable movement charges, 
and direct and indirect selling expenses (which were also deducted from 
COP).
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because we determined that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product during the POI were at prices less than the 
COP, we determined such sales to have been made in ``substantial 
quantities'' within an extended period of time in accordance with 
sections 773(b)(2)(B) and 773(b)(2)(C)(i) of the Act. In such cases, 
because we compared prices to POI average costs, pursuant to section 
773(b)(2)(D) of the Act, we also determined that such sales were not 
made at prices that would permit recovery of all costs within a 
reasonable period of time. Therefore, we disregarded these below-cost 
sales.

C. Calculation of Normal Value Based on Home Market Prices

    We determined home market prices net of billing adjustments and 
added interest revenue. Pursuant to section 773(a)(6)(B)(iii) of the 
Act, we deducted taxes imposed directly on sales of the foreign like 
product (ICMS, IPI, PIS, and COFINS taxes), but not collected on the 
subject merchandise. We note that, in some past cases involving Brazil, 
we have determined that the PIS and COFINS taxes are direct taxes and, 
as such, should not be deducted from NV. See, e.g., Certain Cut-To-
Length Carbon Steel Plate From Brazil: Final Results of Antidumping 
Duty Administrative Review 63 FR 12744, 12746 (March 16, 1998). 
However, in a recent countervailing duty (CVD) preliminary 
determination regarding Certain Cold-Rolled Carbon Steel Flat Products 
from Brazil, we preliminarily concluded that the PIS and COFINS taxes 
are indirect. See Notice of Preliminary Affirmative Countervailing Duty 
Determination and Alignment with Final Antidumping Duty Determinations: 
Certain Cold-Rolled Carbon Steel Flat Products from Brazil, 67 FR 9652, 
9659 (March 4, 2002).
    In reaching this decision, we examined the legislation underlying 
the PIS and COFINS to determine how Brazil assesses these taxes. 
Article 2 of the COFINS legislation states that ``corporate bodies'' 
will contribute two percent, ``charged against monthly billings, that 
is, gross revenue derived from the sale of goods and services of any 
nature.'' Likewise, Article ``Second'' of the PIS tax law (also found 
in the PIS and COFINS legislation) provides similar language stating 
that this tax contribution will be calculated ``on the basis of the 
invoicing.'' The PIS legislation further defines invoicing under 
Article ``Third'' to be the gross revenue ``originating from the sale 
of goods.''
    Section 351.102(b) of the Department's regulations defines an 
indirect tax as a ``sales, excise, turnover, value added, franchise, 
stamp, transfer, inventory, or equipment tax, border tax, or any other 
tax other than a direct tax or an import charge.'' As noted in the PIS 
and COFINS legislation, these taxes are derived from the ``monthly 
invoicing'' or ``invoicing'' originating from the sale of goods and 
services. Therefore, we preliminarily find that the manner in which 
these taxes are assessed is characteristic of an indirect tax, and we 
are treating PIS and COFINS taxes as indirect taxes for the purposes of 
this preliminary determination.
    Where applicable, we also made adjustments for packing and movement 
expenses, such as inland freight and warehousing expenses, in 
accordance with sections 773(a)(6)(A) and (B) of the Act. In order to 
adjust for differences in packing between the two markets, we deducted 
home market packing costs from NV and added U.S. packing costs. For 
comparisons made to EP sales, we made circumstance-of-sale (COS) 
adjustments by deducting direct selling expenses incurred on home 
market sales (commissions, credit, and warranty expenses). We then 
added U.S. direct selling expenses (e.g., credit). For comparisons made 
to CEP sales, we deducted home market direct selling expenses, but did 
not add U.S. direct selling expenses. For matches of similar 
merchandise, we made adjustments, where appropriate, for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.

D. Arm's-Length Sales

    Belgo Mineira reported sales of the foreign like product to 
affiliated customers. To test whether these sales to affiliated 
customers were made at arm's length, where possible, we compared the 
prices of sales to affiliated and unaffiliated customers, net of all 
movement charges, direct selling expenses, discounts, and packing. 
Where the price to the affiliated party was on average 99.5 percent or 
more of

[[Page 18170]]

the price to the unaffiliated parties, we determined that sales made to 
the affiliated party were at arm's length. See Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27355 (May 19, 1997) 
(preamble to the Department's regulations). Consistent with section 
351.403(c) of the Department's regulations, we excluded from our 
analysis those sales where the price to the affiliated parties was less 
than 99.5 percent of the price to the unaffiliated parties.

E. Level of Trade/Constructed Export Price Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade as the EP or CEP transaction. The NV level of 
trade is that of the starting-price sales in the comparison market or, 
when NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For EP sales, the U.S. level of trade is also the 
level of the starting-price sale, which is usually from exporter to 
importer. For CEP transactions, it is the level of the constructed sale 
from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP transactions, we examine stages in the marketing process 
and selling functions along the chain of distribution between the 
producer and the unaffiliated customer. If the comparison market sales 
are at a different level of trade and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison 
market sales at the level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. For 
CEP sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
the levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP-offset provision). See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61733, 
61746 (November 19, 1997).
    In implementing these principles in this investigation, we obtained 
information from Belgo Mineira about the marketing stages involved in 
the reported U.S. and home market sales, including a description of the 
selling activities performed by the respondent for each channel of 
distribution. In identifying levels of trade for EP and home market 
sales we considered the selling functions reflected in the starting 
price before any adjustments. For CEP sales, we considered only the 
selling activities reflected in the price after the deduction of 
expenses pursuant to section 772(d) of the Act. Generally, if the 
reported levels of trade are the same, the functions and activities of 
the seller should be similar. Conversely, if a party reports levels of 
trade that are different for different categories of sales, the 
functions and activities may be dissimilar.
    In the home market, Belgo Mineira reported three channels of 
distribution: direct sales to unaffiliated customers, warehouse sales 
to unaffiliated customers, and sales to affiliated customers. Belgo 
Mineira also reported two levels of trade in the home market: sales to 
unaffiliated customers and sales to affiliated customers. According to 
the respondent, only the most basic selling activities and services are 
required for sales to unaffiliated companies. In addition, because the 
sales to affiliates involve inter-company transactions, negotiations 
with and considerations of credit and collection for affiliated 
companies are far more standardized and less significant. While we 
agree that the intensity of selling activities varies between Belgo 
Mineira's channels of distribution in the home market, we do not agree 
that the variations support Belgo Mineira's claim of two distinct 
levels of trade in the home market. First, we note that Belgo Mineira 
described the same selling activities for all customers, regardless of 
the channel of distribution. In addition, Belgo Mineira provided the 
same sales process description for both channels of distribution; 
therefore, we are not persuaded that the processing of customer orders 
is affected by affiliation. Furthermore, Belgo Mineira's questionnaire 
responses contradict its claim that some selling activities are more 
significant with respect to unaffiliated customers. For example, Belgo 
Mineira claims that it provides more warranty and technical services to 
unaffiliated customers.\7\ However, we note that, in Belgo Mineira's 
section B response, the company did not report any direct warranty 
expenses. In response to the Department's supplemental questionnaire, 
Belgo Mineira stated that it does not have a formal warranty program, 
but developed a customer-specific direct warranty adjustment.\8\ This 
direct warranty adjustment was reported without regard to the 
affiliation of the customer. In addition, the company did not report 
any direct technical services expenses associated with its home market 
sales. For indirect warranty and technical service expenses, the 
company calculated a factor to account for the expenses of its quality 
departments. Again, this factor was the same for all customers, 
regardless of affiliation and market. Although there may be more 
negotiations, freight and delivery arrangements, and credit and 
collection expenses associated with sales to unaffiliated companies, we 
do not find that these differences support Belgo Mineira's claim that 
there are two separate levels of trade in the home market.\9\ 
Therefore, we preliminarily determine that home market sales in the 
three channels of distribution constitute a single level of trade.
---------------------------------------------------------------------------

    \7\ See Belgo Mineira's February 11, 2002 response to the 
Department's supplemental questionnaire at Exhibit B-16.
    \8\ Id. at 76.
    \9\ See Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From France, Germany, Italy, Japan, 
Romania, Sweden, and the United Kingdom; Final Results of 
Antidumping Duty Administrative Reviews, 64 FR 35590 (July 1, 1999).
---------------------------------------------------------------------------

    In the U.S. market, Belgo Mineira had both EP and CEP sales. Belgo 
Mineira reported EP sales through two channels of distribution: sales 
to unaffiliated trading companies and sales to unaffiliated end-users. 
The company identified sales through both of these channels as one 
level of trade. Because the selling activities associated with EP sales 
were similar to the selling activities in the home market, we have 
determined that the EP sales are at the same level of trade as the home 
market sales.
    With respect to CEP sales, the company reported these sales through 
two channels of distribution: sales through TradeArbed and sales to 
TrefilArbed (an affiliated further manufacturer). The company claimed 
that its CEP sales (i.e., sales to affiliates) are at a different level 
of trade than its EP sales (i.e., sales to unaffiliated customers). 
Similar to its home market level of trade analysis, the company claims 
that there are two levels of trade in the U.S. market because Belgo 
Mineira has a close relationship with its affiliated importers, which 
affects the level of selling activities it performs for those 
customers. However, as in the home market level of trade analysis, we 
find Belgo Mineira's arguments unpersuasive. Specifically, we note that 
Belgo Mineira provides the same selling activities for all of its U.S. 
customers, regardless of the channel of distribution. In addition, 
Belgo Mineira provided the

[[Page 18171]]

same sales process description for all channels of distribution; 
therefore, we are not persuaded that the processing of customer orders 
is affected by affiliation. Furthermore, Belgo Mineira's questionnaire 
responses contradict its claim that some selling activities are more 
significant with respect to unaffiliated customers. For example, Belgo 
Mineira claims that it provides more warranty and technical service 
activities to unaffiliated customers.\10\ However, we note that, in 
Belgo Mineira's section C response, the company did not report any 
direct warranty expenses. In addition, the company did not report any 
direct technical services expenses associated with its U.S. sales. For 
indirect warranty and technical service expenses, the company 
calculated a factor to account for the expenses of its quality 
departments. Again, this factor was the same for all customers, 
regardless of affiliation and market. Although, as with home market 
sales, there may be more negotiations and credit and collection 
expenses associated with sales to unaffiliated companies, we do not 
find that these differences support Belgo Mineira's claim that there 
are two separate levels of trade in the U.S. market.
---------------------------------------------------------------------------

    \10\ Id. at Exhibit B-16.
---------------------------------------------------------------------------

    After subtraction of the expenses incurred in the United States, in 
accordance with section 772(d) of the Act, we preliminarily determine 
that the selling functions corresponding to the adjusted CEP are the 
same as the selling functions for Belgo Mineira's home market sales. 
Therefore, we have determined that home market and CEP sales do not 
involve substantially different selling activities, as stipulated by 
section 351.412(c)(2) of the Department's regulations. Because we find 
that the level of trade for CEP sales is similar to the home market 
level of trade, we made no level-of-trade adjustment or CEP offset. See 
section 773(a)(7)(A) of the Act. We will examine this issue further at 
verification.

Currency Conversions

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act based on exchange rates in effect on the dates 
of the U.S. sales, as obtained from the Federal Reserve Bank (the 
Department's preferred source for exchange rates).

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determination.

Critical Circumstances

    In their December 5, 2001, submission, the petitioners' alleged 
that critical circumstances exist with respect to steel wire rod from 
Brazil. Throughout the course of this investigation, the petitioners 
and interested parties have submitted additional comments concerning 
this issue.
    Since the petitioners submitted critical circumstances allegations 
more than 20 days before the scheduled date of the preliminary 
determination, section 351.206(c)(2)(i) of the Department's regulations 
provides that we must issue our preliminary critical circumstances 
determination not later than the date of the preliminary determination.
    If critical circumstances are alleged, section 733(e)(1) of the Act 
directs the Department to examine whether there is a reasonable basis 
to believe or suspect that: (A) (i) There is a history of dumping and 
material injury by reason of dumped imports in the United States or 
elsewhere of the subject merchandise, or (ii) the person by whom, or 
for whose account, the merchandise was imported knew or should have 
known that the exporter was selling the subject merchandise at less 
than its fair value and there was likely to be material injury by 
reason of such sales, and (B) there have been massive imports of the 
subject merchandise over a relatively short period.
    In determining whether imports of the subject merchandise have been 
``massive,'' the Department normally will examine (i) the volume and 
value of the imports, (ii) seasonal trends, and (iii) the share of 
domestic consumption accounted for by the imports. Section 
351.206(h)(2) of the Department's regulations provides that an increase 
in imports of 15 percent or more during a ``relatively short period'' 
may be considered ``massive.'' In addition, section 351.206(i) of the 
Department's regulations defines ``relatively short period'' as 
generally the period beginning on the date the proceeding begins (i.e., 
the date the petition is filed) and ending at least three months later. 
As a consequence, the Department compares import levels during at least 
the three months immediately after initiation with at least the three-
month period immediately preceding initiation to determine whether 
there has been at least a 15 percent increase in imports of subject 
merchandise.
    In this case, we have determined that imports have not been massive 
over a ``relatively short period of time,'' pursuant to 733(e)(1)(B) of 
the Act. As stated in section 351.206(i) of the Department's 
regulations, if the Secretary finds importers, exporters, or producers 
had reason to believe at some time prior to the beginning of the 
proceeding that a proceeding was likely, then the Secretary may 
consider a time period of not less than three months from that earlier 
time.
    In determining whether the relevant statutory criteria have been 
satisfied, we considered: (i) The evidence presented by the petitioners 
in their December 5, 19, and 21, 2001 and January 25, 2002 letters; 
(ii) exporter-specific shipment data requested by the Department; (iii) 
comments by interested parties in response to the petitioners' 
allegations; (iv) import data available through the ITC's DataWeb 
website; and (v) the ITC's preliminary injury determination.
    For the reasons set forth in the memorandum regarding our critical 
circumstances determination for Brazil, we find a sufficient basis 
exists for finding importers, or exporters, or producers knew or should 
have known antidumping cases were pending on steel wire rod imports 
from Brazil by June 2001 at the latest. See Antidumping Duty 
Investigation of Carbon and Certain Alloy Steel Wire Rod from Brazil-
Preliminary Negative Determination of Critical Circumstances Memorandum 
from Bernard T. Carreau to Faryar Shirzad, April 2, 2002. Further, as 
discussed in the above-cited memo, we determined it appropriate to use 
six-month base and comparison periods. Accordingly, we determined 
December 2000 through May 2001 should serve as the ``base period,'' 
while June 2001 through November 2001 should serve as the ``comparison 
period'' in determining whether or not imports have been massive in the 
comparison period.
    In order to determine whether imports from Brazil have been 
massive, the Department requested that Belgo Mineira provide its 
shipment data from January 1999 up until the time of the preliminary 
determination. Based on our analysis of the shipment data reported, 
imports have decreased during the comparison period; therefore, we 
preliminarily find that the criterion under section 733(e)(1)(B) of the 
Act has not been met, i.e., there have not been massive imports of 
steel wire rod from Belgo Mineira over a relatively short time. See 
Antidumping Duty Investigation of Carbon and Certain Alloy Steel Wire 
Rod from Brazil: Preliminary Negative Critical Circumstances 
Memorandum, dated April 2, 2002 (Critical Circumstances Memorandum). 
Because there have not been massive imports in this case, we

[[Page 18172]]

have determined that it is unnecessary to address the other prong of 
the critical circumstances test. For this reason, we preliminarily 
determine that critical circumstances do not exist for imports of steel 
wire rod produced by Belgo Mineira.
    Regarding the ``All Others'' category, although the mandatory 
respondent did not have massive imports, we also considered country-
wide import data for the products covered under the scope of this 
investigation. In determining whether massive imports exist for ``All 
Others,'' we compared the volume of aggregate imports during the base 
period to the volume of aggregate imports during the comparison period. 
Based on our analysis of the country-wide import data, imports of steel 
wire rod increased during the comparison period, but not by the 
requisite 15 percent. See Critical Circumstances Memorandum. 
Accordingly, pursuant to section 733(e) of the Act and section 
351.206(h) of the Department's regulations, we preliminarily find that 
critical circumstances do not exist for imports of steel wire rod 
produced by the ``All Others'' category.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all entries of carbon and 
certain alloy steel wire rod from Brazil, that are entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. We are also 
instructing the Customs Service to require a cash deposit or the 
posting of a bond equal to the weighted-average amount by which the 
normal value exceeds the EP or CEP, as indicated below. These 
instructions suspending liquidation will remain in effect until further 
notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Companhia Siderurgica Belgo Mineira and Belgo-Mineira              65.76
 Participacao Industria e Comercio S.A. (BMP)..............
All others.................................................        65.76
------------------------------------------------------------------------

Disclosure

    The Department will normally disclose calculations performed within 
five days of the date of publication of this notice to the parties of 
the proceeding in this investigation in accordance with 19 CFR 
351.224(b).

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final antidumping determination is 
affirmative, the ITC will determine whether the imports covered by that 
determination are materially injuring, or threaten material injury to, 
the U.S. industry. The deadline for that ITC determination would be the 
later of 120 days after the date of this preliminary determination or 
45 days after the date of our final determination.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. Further, we would appreciate it if parties 
submitting written comments would provide the Department with an 
additional copy of the public version of any such comments on diskette.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to more than one steel wire 
rod case, the Department may schedule a single hearing to encompass all 
those cases. Parties should confirm by telephone the time, date, and 
place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request within 30 days of 
the publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: April 2, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-9215 Filed 4-12-02; 8:45 am]
BILLING CODE 3510-DS-P